On June 6, Squire Patton Boggs’ Miami office hosted the Brazil-Florida Business Council and its members for a discussion titled “Brazil Mid-Year Outlook: The Bolsonaro Administration Scorecard.”

The program featured two prominent speakers, Paulo Leme, former CEO and Chairman of Goldman Sachs Brazil and Professor of Finance at the University of Miami Business School, and John Price, Managing Director of Americas Market Intelligence and Professor at Florida International University. Dr. Susan K. Purcell, the former Director of the Center for Hemisphere Policy, University of Miami, moderated the discussion. The program discussed Brazil’s enormous upside potential and the challenges President Jair Bolsonaro faces in his efforts to improve Brazil’s economy. The program also explored the mechanisms by which Mr. Bolsonaro could put into effect his plan to implement promised budget-tightening reforms and help expand the private sector. Mr. Bolsonaro was elected President of Brazil last October with 55.1% of the total votes. No stranger to government, he served as a Federal Deputy for Rio de Janeiro for 27 years. He is known for his strong support of liberal and pro-market economic policies and conservative social policies.

Mr. Leme, was cautiously optimistic about the future of Bolsonaro’s Brazil, stating that while he would not “short” Brazil, the state’s progression is dependent upon the political class successfully pushing forward crucial reforms in areas such as pensions and taxes.

The original draft bill aimed at promulgating pension reforms sent to Congress aims to save more than 1 trillion reais over the next 10 years by changing workers’ pension contributions, raising the minimum retirement age and closing loopholes. Workers, however, would have to pay more into the system over a longer period of time, and the minimum retirement age would be raised to 65 for men and 62 for women. These changes would be phased in over period of up to 14 years. Brazil’s Pension Reform continues to face new challenges as it moves through congressional committees and changes in public opinion/ While Brazil’s expected savings of BRL $ 1.2 trillion have been diluted to BRL $900 billion over the next 10 years, these savings are still expected to allow the country to invest in key areas of the economy, control inflation and therefore reduce investment risks in Brazil. Many say, that failure to enact the Pension Reform could prevent the growth and drive off investors from Brazil.

Mr. Leme concluded by estimating that Brazil was around 60% likely to continue its slow but steady progress, 25% likely that Brazil would retract as President Bolsonaro loses political capital and reforms stall, and 15% likely that it would perform better than expected. Mr. Leme’s predictions are based on,  in part, on Mr. Paulo Guedes, current Economy Minister,  remaining on in Mr. Bolsonaro’s cabinet. The potential for Mr. Guedes leaving the administration would be very negative and likely to seriously affect Brazil’s prospects. Shortly after the event, Mr. Guedes suggested he would quit if Congress passed a “watered down” version of his pension reform proposal. Apparently unrelated, but possibly a bad omen, a member of Mr. Guedes’s economics team and head of the Brazilian Development Bank, Joaquim Levy, submitted his resignation after President Bolsonaro threatened to fire him over political appointments at the Bank.

Mr. Price, on the other hand, provided what he called, a “main street” perspective. He surmised that disruptive and innovative technologies rather than politics would drive development in Brazil. Mr. Price considered the development and widespread use of mobile apps and the share economy will disrupt existing monopolies. He believes technological innovation drives political change by forcing the political landscape to modernize and adapt in parallel to disruptive developments in the private sector. Political actors, he argued, are simply not flexible or quick enough to protect old business practices and monopolies from disruptive technologies. He cited Uber’s success in Mexico City as one such example, where Uber in spite of politics and interest groups, drove the modernization of the city’s transportation services. Mr. Price was of the opinion that technology will be the driving force behind Brazil’s upside potential in the long run, regardless of the political situation.